What’s Next for the India-US Trade Agreement? Key Talks Set to Shape Future Relations

This week, key discussions between US Trade Representative Jamieson Greer and India's Commerce Minister Piyush Goyal will shape the future of the India-US trade agreement. With a temporary tariff set to expire soon, both nations are working to finalize the framework of their bilateral trade agreement. The outcome of ongoing Section 301 investigations and the need for India to maintain a tariff advantage over competing nations will be crucial in these negotiations. As trade dynamics evolve, the implications for both countries' economies are significant, making this a pivotal moment in their trade relations.

By Narendra Chaudhary Jun 21, 2026, 16:26 IST

Bilateral Trade Talks in New Delhi

New Delhi: This week, US Trade Representative Jamieson Greer and India's Commerce and Industry Minister Piyush Goyal will engage in two days of discussions regarding the initial phase of their bilateral trade agreement.

Goyal informed reporters in Mumbai, "My counterpart is arriving in Delhi tomorrow for the trade deal discussions."

These talks follow earlier negotiations held in the national capital from June 2-4.

Commerce Secretary Rajesh Agrawal recently indicated that the focus of the upcoming discussions will be to finalize the framework of the agreement.

On June 5, Goyal mentioned that both nations are nearing the completion of the interim trade agreement, with expectations to implement the "very, very vibrant" first phase by mid-next month.

Significance of the Upcoming Deadline

The temporary 10 percent tariff imposed by the US on all trading partners, effective from February 24, 2026, will lapse on July 24. Following this date, the Most Favored Nation (MFN) tariffs will apply to goods imported by the US.

This temporary tariff is in addition to the MFN duty, necessitating a new tariff structure from the US before July 24.

To facilitate this, the US is conducting two Section 301 investigations against several countries, including India, which is the only legal avenue for imposing new tariffs.

Details on Section 301 Investigations

In March, the US Trade Representative initiated two unilateral Section 301 investigations against various countries, including India, concerning excess capacity and the failure to eliminate forced labor in global supply chains.

On June 2, the USTR suggested imposing 12.5 percent tariffs on 54 countries, including India, for not adequately prohibiting imports of goods produced with forced labor.

This proposal is still under consideration and has not been finalized. Interested parties can submit requests to participate in hearings and provide testimony summaries by June 22, with hearings scheduled for July 7.

Context of the Investigations

On February 20, the US Supreme Court ruled against President Donald Trump's extensive reciprocal tariffs, which were enacted under the 1977 International Emergency Economic Powers Act (IEEPA). India was subjected to a 50 percent tariff. Following this ruling, the US had to replace these tariffs with temporary duties.

Consequently, Trump announced a 10 percent tariff on all countries for a duration of 150 days, starting February 24.

Framework of the India-US BTA

On February 7, India and the US released a joint statement outlining the framework for the first phase of the Bilateral Trade Agreement (BTA).

Under this framework, the US agreed to reduce tariffs on Indian goods from 50 percent to 18 percent, eliminating the 25 percent tariffs on Indian products for purchasing Russian oil, and cutting the remaining 25 percent to 18 percent as part of the agreement. However, the US Supreme Court's ruling has altered the tariff landscape.

Both nations are now reassessing the agreement's framework in light of these changes.

India's Tariff Advantage

When the BTA framework was established, India held a comparative advantage over competing nations such as those in ASEAN, Sri Lanka, Pakistan, and Bangladesh.

The US had set an 18 percent tariff on Indian goods, while tariffs on competing countries ranged from 19 to 20 percent. However, the recent 10 percent additional levy applies to all countries.

Sources indicate that it is crucial for India to secure a tariff advantage over its competitors in the trade agreement with the US.

Understanding Comparative Advantage

For instance, if the US imposes an 18 percent tariff on Indian imports and a 20 percent tariff on Vietnamese goods, India gains a competitive edge in the US market.

This scenario makes Indian products more appealing compared to similar items from Vietnam.

To illustrate, if both an Indian shirt and a Vietnamese shirt are priced at USD 100 before tariffs, the Indian shirt would cost USD 118 in the US after the tariff, while the Vietnamese shirt would be priced at USD 120.

This lower tariff burden makes Indian products more attractive to American consumers, potentially boosting Indian exporters' market share.

Current Trade Dynamics

In the fiscal year 2025-26, the US ranked as India's second-largest trading partner.

India's exports to the US saw a slight increase of 0.92 percent, totaling USD 87.3 billion, while imports surged by 15.95 percent to USD 52.9 billion. Consequently, the trade surplus decreased to USD 34.4 billion in 2025-26 from USD 40.89 billion in the previous year.